Eversource rate case presenting fiscal woes for solar projects

Thursday

Jul 20, 2017 at 10:04 AMJul 20, 2017 at 10:04 AM

By Matt MurphyState House News Service

BOSTON—Eversource's application to the state for a significant revision of its electric rates has local leaders worried that solar projects in their communities designed to provide cleaner, cheaper energy may become unsustainable.

Eversource, one of the state's major utility providers of electricity and natural gas, has an open case before the Department of Public Utilities seeking at least $96 million in rate increases and an overhaul of its rate structure.

Local and state officials said Wednesday that within the proposal is a 40 percent reduction in the rates utilities would pay for solar energy produced by panels on schools, municipal buildings and landfills.

"We believe strongly this would be a serious impediment to ongoing projects and possible future projects for solar," said Newton Mayor Setti Warren, adding that it could also negatively impact the state's ability to reach its greenhouse gas reduction targets under the 2008 Global Warming Solutions Act.

Warren, who is also a Democratic candidate for governor in 2018, led a conference call Wednesday where local officials and environmental leaders warned of dire consequences if the DPU were to approve Eversource's rate requests. Some communities have become "interveners" in the rate case, asking for existing solar projects to be grandfathered so that the rates relied upon during contract negotiations with solar developers are preserved.

The Eversource proposal, according to town officials, would reduce the net metering price paid by utilities for solar electricity sold back to the grid from 22 cents per kilowatt hour to 13 cents. Ann Berwick, a former DPU commissioner, said that unless existing projects are grandfathered many could go "underwater," meaning the towns will owe more to the developer than they will receive from the energy produced over the life of the contract.

Michael Durand, a spokesman for Eversource, said the proposed rates before the DPU reflect the need to update what are, in some cases, decades-old rates to more accurately reflect the cost of providing electricity. The net-metering changes, he said, are also more complicated than a simple reduction in the price paid by the utility for energy.

Durand said that solar customers would be charged a new minimum on their bills to cover the cost of upkeep of transmission and distribution infrastructure, and make the system more equitable for non-solar customers who help to subsidize solar.

To offset that new minimum charge, solar and wind customers would be charged a lower rate for energy they consume in excess of the renewable energy they produce. Durand acknowledged those same net-metering customers would then be reimbursed at that new, lower, energy price for the electricity they produce with solar panels.

"All customers will continue to pay for this reimbursement, but our proposal is more equitable for non-net metered customers than current rates and reflects the updated cost to serve them," Durand said.

Sen. Cynthia Creem, a Newton Democrat, said taxpayers in her hometown could be on the hook for $400,000 in unanticipated costs for solar installations. She referenced a debate last year in the Legislature when lawmakers fought to preserve a net metering rate for municipal projects at the retail price, rather than wholesale prices for electricity.

"We all believed that that was what was going to happen," Creem said. "This Eversource request is really an end run to circumvent the Legislature and roll back the environmental commitments that we made in Massachusetts."

Natick Sustainability Coordinator Jillian Wilson Martin said her town has solar on the roofs of at least five schools and will soon cut ribbons on new installations on a town ice rink and the Department of Public Works building.

Solar, Martin said, has been key to reducing expenses in Natick by $500,000 annually, but the town could face $6 million in additional costs over the next 20 years if the net metering rates are reduced.

Mark Sandeen, the chair of Sustainable Lexington, said the Eversource rate changes would cost his town $375,000 a year.

Outgoing Environmental League of Massachusetts President George Bachrach said utilities like Eversource make their profits from natural gas, and therefore have a built-in incentive to discourage solar development.

He also took aim at the DPU, suggesting that Chairwoman Angela O'Connor's background working for the pro-business Associated Industries of Massachusetts and Commissioner Robert Hayden's history as a former "Tea Party" candidate for Congress on the South Shore stacks the deck in favor of Eversource.

"Unfortunately, there's now an unholy alliance between the utilities and DPU that operate in the shadows of state government," Bachrach said.

A spokesman for the DPU said the agency does not comment on pending rate cases and declined to respond to Bachrach's accusations.

Berwick said she has been in contact with Attorney General Maura Healey's office and is "confident that they share our concern about this aspect of the rate case." She said, based on DPU's own schedule, that she expects a final decision to be made in late November or early December.